Prop. 90 Savings Are Adopted by Orange County

The Orange County Board of Supervisors unanimously agreed Tuesday to give voter-approved property tax breaks to people over 55 who sell their homes and move to the county.

Under the special tax program, which was approved without discussion by the board, people over 55 who move to Orange County can transfer their low Proposition 13 tax rates to their new home.

The supervisors’ action effectively implements Proposition 90, the ballot initiative that won overwhelming approval last November.

San Diego County supervisors also agreed to implement the measure Tuesday, but Los Angeles County officials, faced with a bleak budget picture, remained divided over whether to adopt the program.

Before Proposition 90, property owners over 55 had been allowed to keep their low tax rates only if they moved within the same county. If they moved from one county to another, they had been assessed at the going market value, which is usually much higher.

But with Orange County’s adoption of the program, people moving into the county can now carry with them their tax rates as set under Proposition 13, the landmark grass-roots initiative that overhauled property tax laws and gave Californians their biggest tax break ever.

Strongly supported by retirees and Realtor organizations, Proposition 90 passed with more than 69% of the statewide vote. However, the allowance applies only if the county where the new property is located approves the tax break.

4 Counties Participate

On Tuesday, Orange and San Diego counties joined Kern and San Mateo as the only counties in the state, so far, to participate in the Proposition 90 plan. Five counties--Monterey, Sacramento, Santa Cruz, Sonoma and Tulare--have already rejected the plan, and others have indicated that they intend to let the program die by simply ignoring it.

The tax break has encountered resistance because it reduces the amount of possible property tax revenues generated by home sales.

“We’re talking about a range of people who have paid their dues,” said Orange County Board of Supervisors Chairman Thomas F. Riley, who is 76. “It seems like this situation is kind of a reward to people; it at least gives them a break.”

Riley said he has been flooded with inquiries from people interested in the county’s position on the measure.

Marian Beacham, an analyst with Orange County’s administrative office, said county officials have counted 178 calls in just the last week.

After studying the issue, Beacham said the county’s staff determined that there would be little or no impact on the government’s budget.

In fact, there could even be a positive effect if county homeowners paying taxes at a pre-Proposition 13 level decide to move elsewhere, she said.

“It is hard to determine exactly what the effect is going to be,” Beacham acknowledged. “We just feel it will not cost the county money.”

Some Already Get Tax Break

In Orange County’s case, people 55 and over who move within the county--for example from Fullerton to Mission Viejo--already get the tax break because of another initiative, Proposition 60, which passed in 1986.

“A number of counties have said they don’t plan to implement it,” said Cary Jung, a legislative analyst for the County Supervisors Assn. of California, which has been surveying the 58 counties.

The resistance to Proposition 90 is troubling news for older homeowners who had planned to sell their homes in one county and buy a retirement home in another at no increase in property taxes.

“I’m all alone in the world, and I want to buy a smaller home,” said a 73-year-old Hollywood Hills woman. “But I can’t do it unless I can keep my Proposition 13 savings.”

Proposition 90, which was backed by the American Assn. of Retired Persons and the California Board of Realtors, was designed to allow older homeowners to maintain their property tax savings, said Assemblyman Dave Elder (D-San Pedro).

Elder, a supporter of the measure, added that it could also benefit younger home buyers by increasing the stock of older homes that owners leave behind when they move.

Under the Proposition 90 program, a homeowner qualifying for the tax break must:

- Be over 55 years of age.

- Buy or build a replacement home within 2 years of selling the previous dwelling.

- Buy a home of equal or lesser value than the sale price of the dwelling being replaced.

Although officials are still estimating the volume of revenue that might be lost in Los Angeles County, Assessor John J. Lynch said he still favors implementing the plan.

Mandate Cited

“We should carry out the mandate of what the people voted for,” said Lynch, who estimated that the revenue losses would be in the “hundreds of thousands of dollars.”

But Los Angeles County’s treasurer-tax collector, Sandra Davis, cited the possibility of even a minimal revenue loss and said she would recommend that the board oppose the plan.

Mark Bloodgood, auditor-controller in Los Angeles County, has made a similar recommendation to county Chief Administrative Officer Richard B. Dixon.